Asset Owners Boosted Private Market Allocation Targets
Institutional investors plan to shift more capital into private markets over the next five years to improve diversification.
Updated on Sept. 28, 2026 in Investing
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In a July 2026 survey of 504 institutional asset owners, Morningstar found that participants intend to raise their private market allocations from 19% to 23% by 2031. This shift involves pension funds, insurers, and family offices managing at least $1 billion in assets.
Why it matters
Investors are pivoting toward private markets primarily to capture better diversification and higher expected returns despite ongoing concerns. Respondents cited liquidity constraints and transparency issues as the most significant hurdles to these long-term portfolio adjustments.
Morningstar survey data shows that asset owners aim to raise private market allocations to 23% within five years, up from the current 19% average. While interest is growing, 63% of the 504 surveyed entities identified liquidity concerns as the primary barrier to increasing their exposure.
The players
Morningstar
An investment research firm that provides data and analysis on global markets to help institutional and individual investors monitor their holdings.
The details
The shift toward private markets involves a complex reallocation of institutional capital, with 43% of respondents targeting private equity, 35% focusing on infrastructure, and 32% favoring private credit or direct lending. Investors must navigate these asset classes while balancing liquidity requirements and the lack of transparency often associated with private investments. Recent trends show that institutional appetite remains cautious in some sectors, as evidenced by 24% of owners reducing real estate exposure over the past year.
Timeline
July 2026: Morningstar conducted the Asset Owner Perspectives Survey.
Past year: 24% of asset owners reduced real estate exposure.
Within five years: Average private market allocations are expected to reach 23%.
Money Landscape
This move to increase private market exposure marks a continuation of the multi-year trend toward institutional reliance on alternative assets for portfolio stability. It sits within a wider cycle of investors seeking higher yields outside of traditional public equity and bond markets.
While these shifts reflect institutional strategies, individual investors should note that increased institutional capital in private markets can influence the pricing and availability of similar assets in retail products. Before adjusting your own strategy, discuss any interest in private market access or fund changes with a qualified financial professional.
The takeaway
Institutional investors are betting that private markets will offer the diversification needed to navigate future market volatility. Investors can track their own portfolio's exposure to private equity or credit by reviewing their fund prospectuses for mentions of non-public assets.
Further reading
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